Denver Women's Commission
When Dollars Fall Short - February 2001
Prepared by Chaer Robert
For Colorado Woman News
February 3, 2001
WHEN DOLLARS FALL SHORT
Economic self-sufficiency is one of our country’s highest cultural values. What does it cost to pay one’s own way? The answer depends on family composition, geography, and many other variables. In the “Colorado Family Needs Budget”, the Colorado Fiscal Policy Institute compiled concrete estimates for four family types: single adult, two parent family-two incomes, two parent families-single income, and a one parent family. They compared these costs for Denver, Pueblo, El Paso, Boulder, Larimer, Montezuma, Yuma, Eagle and Pitkin Counties.
Sample Family Needs Budget:
Single Parent, Children Ages 3 & 6
Clothing, household items) $236.
Monthly Total: $2929.
Yearly Total: $35,143.
Equivalent Hourly Wage: $17.
Obviously, most single parents earn less than $17. per hour, particularly those in entry level or traditional female jobs. In 1997, the average Colorado woman earned about $24,000. per year. Many young parents, particularly single parents, cannot meet their family’s economic needs on their own full time salary. When dollars fall short, families cut corners or seek help.
What is the role of government in helping struggling families? What public policy initiatives are currently being considered at the State Legislature?
Some of the most financially precarious families are those who recently left the public assistance roles. The average 1999 income of Colorado families who left welfare was $10,787. HB 1004 would allow families leaving public assistance to keep more of their earnings before being cut off from assistance. HB 1022 would reduce the barriers for these families to receive one year of Transitional Medicaid.
Perhaps the single most effective government program helping struggling families is the Federal and State Earned Income Tax Credit. For the families formerly on public assistance mentioned above, the Federal EITC added $2249. and the State EITC added $197. to their income. This year HB 1058 seeks to make the State Earned Income Tax Credit permanent.
Recent high utility costs were not reflected in the Family Needs Budget. But the legislature acted quickly to offer some relief to Colorado poorest families by increasing funding for the Low Income Energy Assistance Program.
The high cost of housing has finally gotten everyone’s attention, including the Legislature’s. Rents in the metro area increased 48% from 1992-1998. Home sales prices increased by more than 60%. Meanwhile wages increased by only 28% . Among the legislative proposals are:
- increased funding for the Division of Housing to develop low income housing
- employer-assisted housing tax credits (HB 1253)
- requiring local government to have an affordable housing advisory committee (HB 1174)
- requiring new developments to set aside 10% of their units as affordable housing (HB 1328)
- funding of a housing trust fund through continuation of the stadium tax (HB 1176)
Since housing is unaffordable for many low and moderate income people, it will be fascinating to see which income levels are targeted by the bills that pass.
As indicated in the sample budget, for many families the cost of child care exceeds the cost of housing. Tax credits offer relief to many middle and upper income families, while subsidized child care offers relief to lower income families. Current legislative proposals, however are more likely to raise parental share of costs. SB 19 allows counties to set parental fees. Some counties might lower parental fees, but others could raise them. HB 1096 allows parents to pay the difference between the state reimbursement rate for subsisidized child care and the cost charged by a child care center. This could open up options for some parents, but most low income parents cannot afford an additional fee on top of their co-pay. And if child care providers can get more money for each slot, the law of supply and demand would tend to drive up the price.
Two measures address the cost of transportation. HB 1143 forms a task force to study transportion options for low-wage workers. HB 1089 requires auto insurance companies to offer preferred rates to those making under 185% of poverty level (about $26,000 for a family of three) if they have a perfect driving record.
Every dollar saved on one kind of expense, is desperately needed by low-wage workers for the other household costs. For many of us the role of government is to promote a common good so that all members of the community can survive and thrive.
For more information about the “Colorado Family Needs Budget”, contact the Color